Exactly as other conservative bloggers and myself have been warning of since the conceptual idea of these bailouts were announced: government assistance means government ownership.
In a significant shift, White House and Treasury Department officials now say they can stretch what is left of the $700 billion financial bailout fund further than they had expected a few months ago, simply by converting the government’s existing loans to the nation’s 19 biggest banks into common stock.
Converting those loans to common shares would turn the federal aid into available capital for a bank — and give the government a large ownership stake in return.
While the option appears to be a quick and easy way to avoid a confrontation with Congressional leaders wary of putting more money into the banks, some critics would consider it a back door to nationalization, since the government could become the largest shareholder in several banks.
The Treasury has already negotiated this kind of conversion with Citigroup and has said it would consider doing the same with other banks, as needed. But now the administration seems convinced that this maneuver can be used to make up for any shortfall in capital that the big banks confront in the near term.
Each conversion of this type would force the administration to decide how to handle its considerable voting rights on a bank’s board.
Taxpayers would also be taking on more risk, because there is no way to know what the common shares might be worth when it comes time for the government to sell them.
Do you trust your government? It really boils down to that question. Do you trust the current political leaders on both sides of the aisle with this ownership? With this power? Once the government owns the banks, they own society. It is through finance that all things are gained.
The same government that wants to regulate cow emissions will now have the power to dictate the rules for the ease and liquidity of auto, home, and business loans. Anything from Washington comes with strings attached. In this case government ownership will be used for social engineering.
Don’t like the new High Efficiency twisty light bulbs? Too bad: it’s now a requirement of your mortgage, despite the safety issues.
Don’t like letting your power company regulate your air conditioning during peak usage hours? Too bad, a home energy audit is now required for a HELOC, irrespective of comfort.
Don’t like driving hybrid or eco-friendly cars? Too bad, that’s all you can get for a vehicle loan, despite the need for utility.
Don’t like having your workforce unionized as an employer? Too bad, if you want a small business loan you must consent to a unionization vote, in spite of employee desire.
Consider this: this may sound like a horror story to you, but think of how often Congress goes against the will of the American people. Countless times they have ignored the vast wishes of the American public to suit their own agenda. For example, consider the issues of the banker bailouts themselves. The vast majority of Americans stood against bailing out of private corporations. And yet, Congress did it anyway.
Those same politcans are now co-owners of many banks and will have a say in how that business operates. I guess it comes down to this: do you want your bank to be like the Department Of Motor Vehicles or the Internal Revenue Service?
That, I fear, is what is coming down the pike.